If an individual moves money from a demand deposit account to a money market mutual fund,________.
A) M1+ decreases and M2 stays the same
B) M1+ stays the same and M2+ increases
C) M1+ stays the same and M2 stays the same
D) M1+ increases and M2 decreases

Question

Quizplus · Accepted Answer

Moving money from a demand deposit account (part of M1) to a money market mutual fund (part of M2) means that M1 remains unchanged while M2 increases. Therefore, the correct option is B.

If an Individual Moves Money from a Demand Deposit Account